With health insurance premiums and long-term care costs skyrocketing, you may need a little something to ease the pain.  The deduction for qualified health insurance, Medicare premiums and long-term care can provide significant tax savings for taxpayers who are self-employed, partners/members or more than 2% shareholders.  If your business was profitable and you file a schedule C or receive a K-1, you may qualify for the self-employed health insurance deduction.

How much can you deduct?

Generally, you may deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance can also cover your child who was under age 27 at the end of 2015, even if the child was not your dependent.  This includes Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance.  The deduction is limited to earnings from the business.

You can also take a deduction for premiums paid on a qualified long-term care insurance contracts and qualified long-term care services.  Your CPA can help you determine whether your deduction is limited.

What if I have income but my spouse is covered under Medicare?

This is an often overlooked deduction.  A self-employed taxpayer/partner/member/shareholder may include costs, including Medicare premiums, related to a spouse, dependent or child under the age of 27.

Qualifications, rules and limits apply.

As with all deductions, consult your CPA to determine the qualifications, rules and limits that apply.

See also: IRS Publication 535

~Mitzi E. Sullivan, CPA

M.E. Sullivan is a cloud based professional services provider specializing in cloud accounting.